A major fault of the creation of a Consumer Financial Protection Agency is the resulting loss of reconciliation between prudential and consumer regulation of financial services firms. What might be prudential — for example, a hold on checks in order to avoid fraudulent transactions — might be anti-consumer — i.e., it forces consumers to wait longer than technologically necessary to have their money available for use. There are many such examples, and under current law the problem is worked out within each prudential regulator.

Similarly, HUD has now issued regulations concerning the scope and use of Good Faith Estimates and the HUD-1, and those regulations will go into effect on Jan. 1.

At the same time, the Fed has out for comment proposed changes to Regulation Z, Truth in Lending. Industry has long complained that provisions in Reg Z conflict with the new changes in Respa. Since the authority to reconcile those issues does not reside in one place, the lack of harmony is not reconciled and the problems for the lenders and consumers continue.

It seems clear that cooperation should take place among agencies that share responsibility for regulating similar types of acts and practices. Congress reached that conclusion years ago when it created the Federal Financial Institutions Examination Council and designed it as a formal place where the regulatory agencies could debate among themselves and adopt uniform rules and examination practices. Unfortunately, Congress failed to provide any real authority to the council, so it has never worked the way its authors expected. The FFIEC has no significant status in the financial services regulatory scheme.

So, change that. Make the council a real force. Give it authority to require some uniformity among the agencies. Consider adding to the membership and including HUD for some purposes, the SEC for some purposes, maybe the FTC for some purposes.

Create different subcommittees for different areas of activity. If it seems desirable, make its director a presidential appointee. Explicitly provide broad authority in the mission statement of each agency that they had the authority and responsibility to consider equally both the prudential and consumer aspects of any regulatory or supervisory activity.

Give it a bare-bones staff, sufficient to prepare papers, research issues, provide legal analysis. Require the agencies to work together and make decisions on matters in which they all share regulatory responsibility. Give the agencies, acting as a council, the authority to implement procedures that would lead to uniform rules.

This could retain the advantages of permitting the experienced staff and leadership of the various agencies an opportunity to balance objectives between prudence and consumer needs, yet provide access for full and transparent debate, which would culminate in decisions that would provide every citizen equal rights to the same laws, regardless of where he or she lives.

It could operate in many ways. For example, the FFIEC currently has one subcommittee that in many respects performs its task independently from its other assignments. It could have others, and there is no reason it could not have different agency membership on different subcommittees. It could operate by majority or super majority vote, and it could require public explanations from those opposing the actions of the majority of the agencies on the Council. Congress could engage in extensive oversight of the council's activities.

To fail to consider use of an enhanced FFIEC would be to overlook an existing framework that could serve as the basis for creating harmonious regulations for all citizens, one that would balance prudential and consumer practices regulation, all at very little cost and a minimum of disruption.

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